Canadian Dollar: Risks skewed higher against US Dollar – Scotiabank

FXStreet Insights Team FXStreet

Scotiabank strategists Shaun Osborne and Eric Theoret note the Canadian Dollar (CAD) is a mild outperformer versus the US Dollar (USD), supported by firmer Oil, even as USD/CAD trades about one standard deviation above their fair value estimate. Softer Canadian jobs data contrast with strong wage growth, leaving Bank of Canada (BoC) tightening expectations unchanged. Technically, they see recent gains stalling below resistance and highlight nearby support levels.

CAD steadies as USD/CAD rally stalls

"The CAD is a minor outperformer against the USD on the session by virtue of holding unchanged on the session, with the aid of firmer oil prices. Spot remains about one standard deviation above our fair value estimate (1.3544) this morning, however."

"Canadian jobs data Friday were soft—a drop in jobs, driven by full-time losses, and a rise in the unemployment rate. Hours worked were flat in April, suggesting a sluggish start to Q2 from an activity point of view."

"However, wage gains (4.8%) were stronger than forecast and continue to run well above inflation; with policymakers sensitive to inflation risks, strong wage growth meant that OIS continued to price in around 40bps of tightening by year-end, unchanged from just before the jobs data."

"Despite USD/CAD’s grind higher last week taking out resistance in the low/mid 1.36 zone, gains appear to have peaked around 1.3710/20 resistance that capped rebounds over the past month. The USD’s push higher has turned short-term trend momentum neutral but daily and weekly DMIs are still firmly in USD-negative territory which should help curb gains. "

"A clear push through 1.3720 may see USD gains extend to 1.3750/00. Support is 1.3640/45 and 1.3550/75."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD holds range near 1.3500 after UK Q2 GDP

GBP/USD keeps its range near the 1.3500 psychological mark in the European session on Thursday. The mixed UK GDP and industrial data failed to inspire the British Pound. Meanwhile, the US Dollar stabilizes after the US CPI data-led sell-off, checking any upside attempts in the pair.

EUR/USD flatlines above 1.1500 as US Dollar stablizes ahead of PPI

EUR/USD is trading modestly flat above 1.1500 in European trading hours on Thursday. The pair stalls its rebound as the US Dollar consolidates losses incurred after the release of July's Consumer Price Index report. Inflation in the US moderated across a broad range of goods and services, cooling expectations for an aggressive Federal Reserve rate hike in September and weighing on the Greenback. The US PPI data is next in focus.

Gold weakens further below $4,400 as USD sticks to gains amid Fed bets, Iran tensions

Gold extends its intraday retracement slide from the highest level since June 5, around the $4,450 area touched earlier this Thursday, and slides further below the $4,400 mark heading into the European session. The initial market reaction to signs of moderating US inflation fades quickly as investors remain worried that higher energy prices will rekindle inflationary pressures.

XRP holds at make-or-break level, ADA and SOL risk 50-day EMA breakout

Top altcoins, including Ripple, Cardano, and Solana, are facing downside pressure, holding at crucial support levels. The technical outlook for XRP, ADA, and SOL indicates a mild bearish bias as downside pressure mounts.

Gold has priced a Fed pause. The hike is still coming

July inflation landed exactly where the consensus had it, on all four lines of the release, and Gold responded by adding around 1% and holding fast near $4,400/ounce, trading at its highest since early June. A print that surprises nobody is not supposed to move a metal that far.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.